ACCT301 Week 3 Problem 1 and Problem 2 (Ratios Analysis) _Use it as a Guide !

Problem 1

Required:Express each income statement component as a percentage of sales, and comment on the trends in each line from 2012 to 2013.




	2013	% Sales	2012	% Sales	Comments
Sales	$ 1,000,000		$ 1,200,000
Cost of goods sold	$ 450,000		$ 600,000
Gross margin	$ 550,000		$ 600,000
Operating expenses	$ 600,000		$ 450,000
Net income	$(50,000)		$ 150,000

Problem 2

Required:Compute (1) accounts receivable turnover for 2013, (2) the inventory turnover for 2013, and (3) the net margin for 2012.


Balance sheet items		2013 2012
	Accounts receivable	$ 380,000.00	$ 376,000.00
	Allowance for doubtful accounts	$ (20,000.00)	$ (16,000.00)
	Net accounts receivable	$ 360,000.00	$ 360,000.00

	Inventory	$ 480,000.00	$ 440,000.00

Income statement items
	Sales	$ 3,400,000.00	$ 3,080,000.00

	Cost of goods sold	$ 1,600,000.00	$ 1,440,000.00

	Operating expenses

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